US hedge fund Citadel Investment Group is planning an opportunistic bid for UK rail operator GNER, hoping to acquire the group cheaply because of debt problems at its Bermuda-based owner, Sea Containers, Britain?s Sunday Express newspaper reported without citing sources.

Citadel declined to comment, the paper said, while Sea Containers said talk of a sale of GNER was ?speculative?.

Sea Containers defaulted on the terms of some of its bonds last month, and in March breached several lending agreements with its bankers. GNER last week also suffered a setback when it lost a legal battle to prevent another train operator from setting up a rival service on the UK east coast.

Separately, Sea Container?s largest investor has said the company should be broken up and sold, according to a report in the Independent on Sunday.

?This company will be liquidated and sold. It serves no other purpose,? the paper quoted Jeff Bronchick of US fund manager Reed Conner & Birdwell as saying. California-based Reed Conner & Birdwell is Sea Container?s biggest shareholder with a 13 percent stake.

Citadel is the primary investor in Bermuda-based reinsurer CIG Re.

On Thursday, GNER lost a legal bid to block two competitors from running passenger services on parts of its main route, sending Sea Containers shares down as much as ten percent.

The High Court in London rejected GNER's bid to quash a regulatory decision allowing Grand Central Railways Company Ltd. and Hull Trains Company Ltd. to run trains between London and England's northeast coast.

The judgment may threaten GNER's ability to pay some of the ?1.3 billion ($2.4 billion) it promised to pay the government during its ten-year service agreement on the line, Sea Containers said in a statement.

GNER, which carried around 17 million passengers last year as the franchise operator on the East Coast Main Line between London and northern Scotland, announced earlier that its chief executive Christopher Garnett would be stepping down in August after ten years with the company.